Fanjoy, which delivers e-commerce-driven branded merchandise solutions to online influencers/creators, has filed for Chapter 11 bankruptcy protection and now collectively owes some promo products industry companies more than $1 million.

In an Aug. 8 filing in the U.S Bankruptcy Court for the Northern District of Georgia, Fanjoy named its creditors with the 20 largest unsecured claims. They included Top 40 supplier S&S Activewear (asi/84358), which is owed $89,268. That figure was relatively modest compared to the $147,380 due to California-based supplier Lane Seven Apparel (asi/66246).

Meanwhile, the sum owed to apparel wholesaler Independent Trading Co. is even larger: $277,996. Printful, which specializes in on-demand merch printing and fulfilment, is due nearly $650,000. Fanjoy is in the hole to the tune of $288,546 to Gemini Apparel, described as a clothing manufacturer with a New York address.

Other promo industry firms are counted as creditors, too, though not among the 20 largest. They include Top 40 supplier alphabroder (asi/34063) and A Thread Ahead (asi/101620), a distributor/decorator based in San Fernando, CA.

There’s also Florida’s Miami Tees, which provides screen printing and more, and Placentia, CA-headquartered Quickturn Professional Screenprinting. The filing didn’t state the amounts that alphabroder, A Thread Ahead, Miami Tees and Quickturn are owed.

Bankruptcy & Outlook

In business for about a decade, Fanjoy partnered with major internet personalities over the years, including Jake Paul, Addison Rae, Elyse Myers and George Not Found.

According to the bankruptcy filing, Fanjoy owes Myers $86,562 and gaming streamer George Not Found $94,500. TikTok and Google also have unsecured claims that are among the 20 largest listed in the filing.

Inspired while selling merchandise on the road with his brother’s band, Chris Vaccarino founded Fanjoy in 2014 and built a business centered on the design, production, fulfillment and marketing of custom merchandise, particularly for the creator community. Headquartered in California, Fanjoy says it has shipped millions of packages since its inception.

During the darker days of the COVID-19 era, Fanjoy’s e-commerce business model reportedly helped propel sales. However, the firm subsequently hit a rough patch, in part because it’s become easier for creators to set up their own merch stores without Fanjoy’s help, according to tubefilter. In court papers filed by one creditor, it’s alleged that mismanagement by Vaccarino was a key reason for the downfall.

The downturn in fortune was enough to leave the nearly decade-old company with $100,000 to $500,000 in assets – but liabilities of $1 million to $10 million. One court filing said debts totaled about $8.74 million specifically as of June 8, a tally that doesn’t include money owed “insiders” as defined by the Bankruptcy Code. Fanjoy has between 100 and 199 creditors, according to its bankruptcy filing.

As such, Fanjoy opted for bankruptcy.

“We’ve filed for Chapter 11 to restructure and strengthen our business strategically,” Vaccarino, who is company president, told Insider. “This decision aligns with our relentless commitment to supporting our creators. We’re optimistic about the future and will share more as we embark on this new chapter.”

Ultimately, the promo companies and other creditors could get their money from Fanjoy. Typically, Chapter 11 works as a reorganization bankruptcy in which businesses are allowed to maintain day-to-day operations while creating a plan to repay creditors. In Chapter 11, a plan of reorganization is proposed and creditors whose rights are affected may vote on the plan. The plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.

Still, just how things will play out remains to be seen. In a new filing, CircleUp Credit Advisors, a secured creditor of Fanjoy, has challenged the Chapter 11 bankruptcy, saying in part that the court should dismiss it because it was filed in a “bad faith” attempt to prevent a sale of Fanjoy that Vaccarino didn’t want to go through.

Due to Fanjoy’s financial troubles and as a result of a lawsuit brought by CircleUp, a California state court had previously appointed a receiver to take possession and control of Fanjoy’s assets. The receiver – a neutral professional entrusted, in this case, to manage the struggling company's operations and finances – was coordinating a sale expected to close within the next several months that would benefit creditors, CircleUp asserts. However, these “efforts have been abruptly disrupted by the suspect filing of Chapter 11,” according to CircleUp’s challenge.

CircleUp also maintains that the bankruptcy case was improperly filed in Georgia, where Vaccarino is said to have a residence, to frustrate CircleUp’s enforcement of its California “state-law rights and to seize control from the receiver to avoid the sale.”